Alitalia is Still Losing Money

It’s been way too long since my last Alitalia post, hasn’t it? It’s actually been pretty quiet over there as the new management team tries to figure out how to make something of nothing. There’s no question they still have a long way to go after posting their latest results.

For the first half of 2009, the new management team turned in a stellar $385 million loss. That’s right. By “stellar,” I mean “absolutely terrible.” That was 6 percent worse than predicted. But the good news is that $300 million of that loss came in the first quarter. That means they lost less than $100 million in Q2. Should we be congratulating them for that? Sheesh.

Load factors have been dreadful. In the first quarter, it was 51 percent but in the second quarter it rose to 65 percent. It’s amazing how good a number like 65 percent looks when it follows 51 percent. It’s still terrible.

The airline is expecting a 72 percent load factor this month, but that is still below where it should be. We’re talking about Italy in July – every tourist on earth is heading there as we speak and yet they can’t even fill three quarters of their seats? Yikes.

Actually, you might want to consider picking on Austrian, too. They’ve got close to 2 billion euros in debt (many times more than their equity) and are limping along thanks to a 200 million euro bailout from the Austrian government earlier this year, two-thirds of which is already spent. Austrian taxpayers are set to lose half a billion euros on the airline by the time that it’s finally sold to Lufthansa…

David – Um, no. It’s more fun to be harsh when the airline has shown time and time again that it can’t turn itself around. I blame the government of Italy more than anyone else, and that hasn’t changed.

BLR/David SF/Tom – I know there are plenty of worthy candidates, but I kind of subscribe to the theory that until Alitalia shows truly positive results or it disappears, it will be the title holder. After that, there are plenty of options. I did mention Aerolineas Argentinas as a worst airline in training. Certainly United would have to be on the list. Austrian is downright awful when it comes to managing the business.

It is kind of normal to have those LF. For example why should I fly Alitalia from Napoli to Venice with 70euro OW, when I get a RT with EasyJet for only 90 euro (lets say I dont catch a promo with 40euro RT).

Why should I fly Bucharest to Rome with them (3 times a day by the way) with 190 euro, when I can fly low-cost with only 40 – 90RT, or I can fly TAROM (Romanian national carrier) for onlye 140RT.

Why should I fly Bucharest to Milan RT from 230 euro, when I have Lufthansa with 99.
And so on… they could have better load factors if they will adapt the tariffs to the market. In this right moment it is cheap to fly Bristish Airways to UK from any city in Italy than to fly Alitalia. It is cheaper to use SAS than Alitalia. And so on…

I think some of it has to do with branding as well, at this point this brand is so damaged that even if they turned everything around I doubt they could become profitable. Customers remember bad experiences for a long time, in this case every unhappy Alitalia customer makes sure to tell all of their friends relatives to not fly with the airline. Remember how everyone used to rave about Tivo a few years back ? this is the exact opposite.

My parents are on a Mediterranean cruise and flying AZ FCO-ORD in a couple of weeks. I told them I want a full report after they return. No, they did not have a choice of carrier from what they said. The travel agency or cruise line booked their tickets. They had BA ORD-LHR-IST on Monday.

People – the whole Alitalia is terrible is overdone. They’ve merged with Air One (one of their main domestic competitors), and currently have a good share of the Italian market. Alitalia is not about to go away any time soon, and negative brand impressions can be reversed over time. To go from the edge of bankruptcy to 90 per cent load factors does not happen in a few months.

In the 1970s, BA was known as Bloody Awful – by the end of the 1980s they were world class. In the 1980s Air France nearly went bust, now they’re one of Europe’s megacarriers. Just because an airline is bad now doesn’t mean it has to remain bad forever.

Yes, Alitalia are making losses, but I don’t know of many airlines who are highly profitable at the operating level right now (big bets on fuel prices that happened to have paid off this quarter, and which are labelled as profitable fuel hedges do not count !)

Last week I was looking at timetables and prices for LHR to either MXP or LIN. Because of an awkward gap in BA’s outbound schedule during the morning, and a similar gap in LH Italia’s inbound afternoon schedule, I ended up splitting the trip between the two airlines. That’s the second time this year I’ve made that choice on this route. It was only when discussing my travel schedule with a colleague this morning that I realised I hadn’t even considered AZ.

I travel from London to Italy at least four times a year, often in business class – if I can forget that AZ exisit, they have a serious PR issue.

Since the merger with Air One, has Alitalia changed the quality of their product? I flew them ORD-MXP-DEL in early 2007. The food was nearly inedible and the FAs were disinterested. The overall impression was not good. Since then I have avoided them, and can’t imagine flying them unless forced to by schedules or their fares being ridiculously low.

David – Of course Alitalia won’t go away soon. They should have been killed off long ago, but thanks to the inept government’s desire to keep it going, it will continue forever. In this case, the airline has to prove that it has improved – until then it will retain the title.

Not much of a surprise considering the awful serivice on their transtalntic route. Cabin attendents breeze through as early as possible with unedible food and then disappear for the rest of the flight. Their Delta code share partner is far superior…better attitude and service…so make sure you are getting a Delta ride.

CF,
>> (…) thanks to the inept government’s desire to keep it going, it will continue forever.

Agreed. But national airlines will always get government funding, in Europe.

Tom,
>> Their Delta code share partner is far superior

Delta? Really? I do not like Alitalia and avoid it whenever possible, but Delta is no better. Micro-screens, poor channels selection, cr*ppy food (WAY worse than Alitalia’s), flight assistants with bad attitude… that’s what I had when I used Delta during the two years I spent in Atlanta. Service-wise, the Delta – Alitalia marriage is a perfect one.

Cranky, you are essentially correct on everything. Let me add a few details though that may help everyone understand the AZ situation better. My apologies if you have covered any of these in previous posts – as you say, it has been a long time!

Until January this year, it would have been wrong to consider AZ as an airline. It was a government department with flight operations, staffed by civil servants. Much like the railways. Although some government departments are capable of being excellent, I think we all know what the depressing average is when it comes to dealing with the public!

Having established that, it is therefore clear why it has dodged death on so many occasions and why, even up until 2009, it has the 1980’s service levels of other European national carriers long since privatised.

It is maybe also misleading to think of it as having been saved by its transfer to private ownership at the beginning of this year, especially considering how this came about. Yes, the Italian government took on its liabilities and sold a “good company” to private investors, thus “saving” the airline. The airline saved though was AP, not AZ. Two facts make this obvious. The merger was pushed by the bank Intesa San Paolo, who had massive exposure to a weakening AP. The deal has reduced their exposure and given them a near assured buyer for their stake in the new AZ. The other element that makes this obvious is that AF now have a 25% (IIRC) stake in the new AZ. 6 months previously they were politiked out of buying 100% of AZ, debts included. Our current prime minister made keeping AZ in Italian hands an election priority and played a key role, together with the bank, of engineering the privatisation. In five years time AF will probably own the carrier having been saved from its liabilities by Italian electioneering.

So what now for AZ? Despite the dog’s dinner that is AZ/AP at the moment, I honestly feel that eventually we are going to get a truly excellent carrier as AF gradually increases its influence over operations. It’s going to be long and slow though. And as an Italian tax payer, god knows how much its cost me to get to this point!!

Just flew Alitalia last month, MXP-JFK. As for load factor, you are indeed correct. The flight load was about 40-50% on a B777, which was absolutely perfect for me and the other passengers who had their own rows to stretch out on, but I’m sure horrible for Alitalia.

As for worst airline ever, I would say yes if you mean worst profitable airline ever, and no as far as worst airline to fly on. The service was actually pretty good, better than the legacy carriers (PTV’s with AVOD, good meals, free alcohol, etc). However the other MXP-JFK flights leaving that day on Delta and American seemed to be pretty full. And I got my ticket on Alitalia for half the cost of any other airline. It looks like Alitalia needs to drastically reconsider its marketing and/or route loads, because a 50% load on a transatlantic flight in July, when all the other carriers are running at near full capacity, is not good for business. But that being said, as long as they are still in biz, I’d much rather fly then transatlantic than any American carrier.

Was sad a few months ago when I flew mxp-lhr with Lufthansa, landed at T2 (now T1 thanks God) and all the former alitalia signs and empty desks..by the way, lufthansa economy service on these routes is very good.

I am flying Alitalia this Weekend, my first time. Thought I was booking a Delta Flight with my credit card miles and just found out it is a code share with Alitalia – out of MIA. Quite nervous after reading so many negatives, anyone have anything positive to put me at ease??????? Please

If it’s a 777 then it’s comfortable enough and far better than the Delta 767, even though the AZ interiors have seen better days. If you get the AZ 767 then… I’m sorry. If you’re connecting out of FCO pack a change of clothes in your hand luggage – just to be on the safe side!!

I am flying Alitalia this Weekend, my first time. Thought I was booking a Delta Flight with my credit card miles and just found out it is a code share with Alitalia – out of MIA. Quite nervous after reading so many negatives, anyone have anything positive to put me at ease??????? Please

Looks like it’s a 777, so you should be good. You’ll get there – it’ll be fine! Definitely report back.

Nope. I don’t take that flight until the end of the week. But I couldn’t do that anyway since there’s no internet onboard. They will have mobile phone and text msgs via OnAir, but no US mobile carriers participate.

Thanks for what you said – it does make me feel better. It is a 777, new equipment from what I’ve been told so I am hoping at least for clean. We are flying back direct from Rome so I hope it will be ok. I am already packing a carry on with extra clothes anyway. Thanks, you guys are great. FYI – I did call Alitalia several times for certain info and everyone I spoke to on the phone was very nice and helpful, with the exception of one woman. I don’t pay much attention to that because I fly all the time and with US Air you can get the nastiest FA’s around. Thanks again

I just flew Alitalia (Toronto Rome roundtrip) not realizing that it had such a bad reputation. My terrible experience drove me to the web to see if I was the only one who thought it was a horrible airline. Boy, I sure am not the only one! Short list of complaints: no ability to check in online or at a kiosk at airport; broken seat; same movies coming and going; scanty food; rude/non-existent customer service; 1.5 hour wait on the tarmac with no explanation; filthy bathrooms; long wait for luggage (but at least mine arrived!!). Last time I’ll ever fly the airline.

i came across this doing a search for some reference photos. i just had to leave a comment. dont exactly know what stance im taking, but figured i would provide my story.

my father met my mother at alitalia airlines. they worked at JFK together. my father still works at alitalia. things got incredibly difficult and shitty in 2009. for me, it always seemed like alitalia got such a bad rap. and i admit, i just flew two flights with them, and the food wasn’t amazing.